General Electric: Drastic Change Afoot?

Tickers in this article: GE HON

NEW YORK (TheStreet) --General Electric clearly needs a major shakeup, and you have to wonder how long it will take before the need for the company to do something starts grabbing headlines on a regular basis. 

Certainly the stock's underperformance is getting increasingly hard to ignore.

Shares of GE are up less than 9% over the past 12 months, versus a more than 19% gain for the S&P 500.

There are signs Wall Street may be growing impatient, with Fox Business reporter Charlie Gasparino recently raising the specter of an activist shareholder setting its sights on the company. 

The latest sign of impatience around GE came from a Barclays research report Monday.

"GE will likely need to change, potentially more drastically than it or its board may be considering at present," wrote analyst Scott Davis in the report.

Davis observed that though some 80% of incoming phone calls were about GE when he started covering the conglomerate in 2002, that has fallen all the way to about 5% today.

Davis notes other large conglomerates such as 3M Emerson Electric and Honeywell are also losing their grip on investors' imagination.

For GE, at least, Davis believes the future is in its infrastructure businesses.

"GE can't expect that it can continue to underperform and take as little action as the company has taken. The overwhelming evidence, in our view, suggests that GE should not be in the banking business; the appliance business; the lighting business; datacenters, or any other non-core, non-infrastructure based business," he writes.

Despite the tough talk, Davis still recommends GE shares to investors.

"We believe the stock is too cheap versus the peer group to justify a downgrade and the recent pullback is more severe than likely deserved," Davis writes.

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